A Royal Flush

Those who know me well know that I am fairly superstitious character. Occasionally I take superstition to extremes. For example, when the Baltimore Ravens beat Indianapolis Colts and then the Denver Broncos in successive NFL playoff games in January, I was sitting in the exact same spot the entire time. What is crazier still is that I elected to go through the same routine and sit in the same spot for the AFC Championship Game and then the Super Bowl, instead of joining friends at various parties.

I know you must think I am more than a little nuts. But they won, right? Anyway, I mention this because I had a series of interesting encounters which has led me to highlight a stock I would not likely profile under other circumstances.

Following a number of consecutive trips to public men’s rooms in different locales, I came across (well not really across) a specific brand of hygiene and sanitation products everywhere. If they are really as ubiquitous as it appeared, perhaps business is brisk.

The Company in question is Swisher Hygiene, Inc. (NASDAQ – SWSH - $1.33) and I would lay odds that you have seen the Company’s red logo and products before as well.  Originally founded as a franchised restroom hygiene provider, Swisher is a leading provider of essential hygiene and sanitation solutions including cleaning and sanitizing chemicals, restroom hygiene sanitizing chemicals, restroom hygiene programs, and other related products and services.

Today, Swisher participates in a $90B size market and following the completion and integration of dozens of acquisitions, the Company is now the second largest chemical provider in the institutional market. Moreover, via its national platform, the Company has over 800 distributors and group purchasing organizations.

Following the commencement of major initiatives to enhance productivity and efficiency, and including the sale of one of its divisions, Swisher is on track to operate with an annual revenue run rate of $225M, with $70M in cash, and a target of cash flow profitability next quarter. Given its low price/revenue multiple of around 1x sales, we believe the stock is poised to make a run to $2.00 in the coming months, if it achieves its cash flow profit objectives.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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